Tuesday, July 29, 2014

Are You Part of the Richest 1%?

Have you ever wondered if you are a member of the esteemed (or notorious) top 1% made famous by the Occupy movement? I suspect most of you already know. To qualify by income as a “one per center” your adjusted gross income would need to exceed $389,000 according to 2011 IRS statistics. The 1.4 million Americans in this group received 18.7 % of the income and paid 35% of all income taxes.

But income may not be the best determining factor. If you received $500,000 in tax-free bond income or you chose not to report the half million dollars from an illicit or overseas activity, you would not officially be part of the 1 %. You might not have paid any federal income tax.

For this reason, wealth, or net worth, is a better measure of who is rich, but net worth is harder to quantify. To become part of the richest 1% by net worth (assets less liabilities), your wealth would need to exceed $9 million according to New York University Economics professor Edward N. Wolff.

Wealth is growing most rapidly for the richest one hundredth of one percent. That 's not good news for the remaining 99.99% of us. According to Business Week, this group owns over 11% of America's wealth, the highest percentage it has been since the “Roaring Twenties,” over 90 years ago. In the 1970s, they owned 3% (see first link below).

"An amazing chart (see second link below) from economist Amir Sufi, based on the work of Emmanuel Saez and Gabriel Zucman, shows that when you look inside the 1 percent, you see clearly that most of them aren't growing their share of wealth at all. In fact, the gain in wealth share is all about the top 0.1 percent of the country. While nine-tenths of the top percentile hasn't seen much change at all since 1960, the 0.01 percent has essentially quadrupled its share of the country's wealth in half a century."

If you want to learn more about expanding income inequality and the Incredible Shrinking Middle Class, I’ve included some interesting links below.

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